Concentrations of Risks

6 Months Ended

Sep. 30, 2019

Risks and Uncertainties [Abstract]

Concentrations of Risks

Concentrations of Risks

The Company sells to customers globally. Credit evaluations of its customers’ financial condition are performed periodically, and the Company generally does not require collateral from its customers. One of the Company's customers, Satori Electric., LTD., an electronics distributor, accounted for over 10.0% of gross accounts receivable at September 30, 2019. Due to Typhoon Mitag impacting East Asia in late September 2019, payments from Satori Electric., LTD., were temporarily delayed to October 1, 2019 due to bank closures during the typhoon. The Company collected approximately 40.0% of its September 30, 2019 outstanding accounts receivable balance from Satori Electric., LTD. on October 1, 2019. If that amount had been collected on September 30, 2019, the customer would not have accounted for over 10.0% of the Company's gross accounts receivable as of September 30, 2019.  There were no customers' accounts receivable balances exceeding 10.0% of gross accounts receivable at March 31, 2019.

Consistent with industry practice, the Company utilizes electronics distributors for a large percentage of its sales. Electronics distributors are an effective means to distribute the products to end-users and they accounted for 40.0% and 41.4% of the Company's net sales for the three months ended September 30, 2019 and 2018, respectively, and 41.4% and 41.5% for the six months ended September 30, 2019 and 2018, respectively. One of the Company's customers, TTI, Inc., an electronics distributor, accounted for over 10.0% of the Company’s net sales for the three and six months ended September 30, 2019 and 2018.     

Legal Update

As previously reported, KEMET and KEC, along with more than 20 other capacitor manufacturers and subsidiaries (including TOKIN, as reported in “Item 3. Legal Proceedings” of our Form 10-K for the year ended March 31, 2019, are defendants in a purported antitrust class action complaint, In re: Capacitors Antitrust Litigation, No. 3:14-cv-03264-JD, filed on December 4, 2014 with the United States District Court, Northern District of California (the "U.S. Class Action Complaint”). The complaint alleges a violation of Section 1 of the Sherman Act, for which it seeks injunctive and equitable

relief and money damages. On November 8, 2019 KEMET and KEC entered into a settlement agreement (the “Settlement Agreement”) with the plaintiffs in the U.S. Class Action Complaint by which, in consideration for the release of KEMET, KEC, and their affiliates from all claims relating in any way to the conduct alleged in the U.S. Class Action Complaint and from claims which could have been asserted in the U.S. Class Action Complaint to the extent they relate to the sale of capacitors in the United States, KEMET agreed to pay an aggregate of $62.0 million to the settlement class of plaintiffs. The Settlement Agreement is subject to court approval. Pursuant to the terms of the Settlement Agreement, $10.0 million will be paid by KEMET into an escrow account within 30 calendar days of the date of the Settlement Agreement and the remaining amount will be paid by KEMET within 12 months of the date of the Settlement Agreement. Under the terms of the Settlement Agreement KEMET and KEC did not admit to any violation of any statute or law or any liability or wrongdoing.

The Company recognized the $62.0 million expense in the Condensed Consolidated Statements of Operations for the three and six months ended September 30, 2019 in the line item, Antitrust class action settlements and regulatory costs. The payable is included in the line item, Accrued expenses, in the Condensed Consolidated Balance Sheets as of September 30, 2019.